While the placement of a laboratory employee or lab phlebotomist in an ordering physician's office is not unlawful, there is the risk of running afoul of the federal Stark Law and Anti-Kickback Statute (AKS), and attracting the attention of the U.S. Department of Health and Human Services’ Office of Inspector General (OIG). If you are a physician, practice manager, or other health care provider, understanding the fine line between what is allowed by the AKS and what is not can help your practice avoid a violation.
What is the Federal Stark Law?
The Stark Law [42 U.S.C. § 1395nn], also known as the Physician Self-Referral Law, is a federal civil law that prohibits physicians from referring patients to entities that provide designated health services (“DHS”) payable by Medicare, if: (1) the DHS entity has a financial relationship with the referring physician or a family member of the referring physician, and (2) the arrangement fails to satisfy an applicable exception. Financial relationships include both compensation relationships and ownership interests. Clinical laboratories provide designated health services. Unlike the AKS, the Stark Law is a strict liability statute that does not require proof of specific intent to violate the law. Penalties for physicians who violate the Stark Law include fines and exclusion from participation in the Federal health care programs.
What Is the Federal Anti-Kickback Statute (AKS)?
The AKS [42 U.S.C. § 1320a-7b(b)] is a federal criminal law that "prohibits the knowing and willful payment of ‘remuneration’ to induce or reward patient referrals or the generation of business involving any item or service payable by the Federal Health care programs," such as Medicare or Medicaid. In this context, remuneration is defined as anything of value, and can include everything from cash to services to free meals. Under the AKS, both the party offering or providing the kickback and the party receiving the kickback are subject to criminal penalties and administrative sanctions including fines, imprisonment, and exclusion from participation in the Federal health care programs.
The Texas Patient Solicitation Act, also known as Texas' AKS, similarly prohibits physicians and health care providers from offering or accepting remuneration for patient referrals or solicitation. Texas law does not currently ban the in-office placement of lab-employed phlebotomists.
How Do the Stark Law and Anti-Kick Statute Relate to Clinical Lab Services?
The OIG has clearly established the parameters of placement of lab-employed phlebotomists and lab equipment in ordering physicians' offices. In a 1994 alert, the OIG stated that when a testing lab provides an ordering physician or health care provider with something of value that has not been paid for at fair market value, this can be interpreted as an inducement for a referral. The alert goes on to say that the mere placement of a laboratory employee would not necessarily indicate an unlawful referral arrangement, providing that the lab employee only performs services related to the collection of specimens.
Stark Law specifically allows laboratories to provide physicians with items, devices, or supplies that are, in fact, solely used for the collection, transportation, processing, and storing of specimens for testing by the laboratory.
The goal of Stark, the AKS, and the OIG is to protect patients and ensure that doctors are selecting clinical laboratories that are truly in service of the patient's best interests and not because they are receiving some sort of kickback or benefit.
How to Avoid Kickback Risks When Placing a Phlebotomist in Your Medical Office
It is not uncommon for laboratories to place phlebotomists and lab equipment in medical practices or other health care facilities (nursing homes, clinics, etc.). As long as this is legal in your state (as it is in Texas), the mere placement of a lab phlebotomist in a physician's office isn't a problem.
Where testing labs and medical practices run into trouble is when that lab or their phlebotomist provides or offers any sort of inducement or benefit to the ordering physician for referring patients of Medicare, Medicaid, or other federally run health care programs to that lab specifically.
In these situations, inducement or remuneration can take many forms, including:
- Having the phlebotomist perform other duties in the physician's office, such as taking vital signs, nursing functions, or clerical work
- Providing laboratory equipment, computers, and other equipment to the physician's office and which is not used exclusively for necessary laboratory-related tasks and by the laboratory employee
- Free biohazardous waste pickup and disposal when that waste is not related to specimen collection for the laboratory
- Reimbursing or paying the physicians to draw blood on the laboratory's behalf
- Providing free supplies to the physician or medical practice
- Providing physicians, health care providers, their employees, and their families with free testing
When Are In-Office Phlebotomist Arrangements Allowed?
Laboratory employees collecting specimens and/or placing lab equipment in your medical practice or office is an approved arrangement under the AKS, provided it is allowed by state law. However, it is paramount that the phlebotomist only performs medical and clerical functions directly and exclusively related to the collection and processing of lab specimens and nothing else.
These rules apply to lab-placed phlebotomists in a variety of health care settings, including:
- Physician's offices
- Medical practices
- Nursing homes
In some situations, a testing lab and the medical practice may have a written contract that prohibits the phlebotomist from performing tasks outside specimen collection and testing, but this alone is not enough to protect you from an AKS violation. The phlebotomist should also be closely monitored by their employer (the lab), and the medical practice should ensure that the prohibitions in the contract are rigorously enforced.
If you have a lab-placed phlebotomist in your practice or facility, you should take extra care to protect yourself from AKS violations.
Keep reading for some tips on how to protect your practice:
- Have a written contract with the laboratory that employees the phlebotomist. Any physician, medical practice, or health care facility with an in-office, lab-placed phlebotomist should have a detailed written contract with the lab. While this written contract alone is not enough to protect you from a violation, you and the lab must be on the same page regarding what role the phlebotomist will play in your practice, and you both must be committed to preventing a Stark or AKS violation.
- Specify the tasks the phlebotomist is allowed to perform and which they are not. The scope of the lab employee's duties should be limited solely to those necessary for specimen collection and testing specifically for the outside lab and nothing else.
- Develop a system of oversight. When it comes to protecting your medical practice from AKS violations, you must remain vigilant. Do not rely solely on a written contract between your practice and the laboratory nor depend exclusively on the outside testing lab to ensure that their employees adhere to the provisions in your agreement. You should develop your own methods for oversight in your office and strictly monitor the phlebotomist for compliance. It may be tempting for a friendly lab employee to lend a hand around the office, but those moments of helpfulness can lead to severe consequences.
- Do not charge for lab services. The physician or provider hosting the lab employee may not charge for the services the phlebotomist provides.
- Have a strong legal team by your side. If you are a physician, practice manager, or other health care provider and you are considering including a lab-placed phlebotomist in your practice, you should consult with an experienced attorney first. With over 100 years of collective experience in health and medical law, the lawyers at Hendershot Cowart P.C. are well prepared to provide the counsel you need – including contract reviews – to stay compliant with the AKS and the Texas Patient Solicitation Act.
Our lawyers also have extensive experience handling health care regulatory compliance issues and health care investigations. We are a nationally recognized health care law firm, and we know how important your practice and your patients are to you. When you need honest, reliable counsel, turn to Hendershot Cowart P.C.
To schedule a consultation with one of our skilled attorneys, reach out to our law firm at (713) 909-7323 or send us a message online.